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Regular version of the site
Master 2020/2021

Auctions: theory and practice

Type: Elective course (Economics: Research Programme)
Area of studies: Economics
When: 1 year, 4 module
Mode of studies: offline
Open to: students of all HSE University campuses
Instructors: Pasha Andreyanov
Master’s programme: Academic Economics
Language: English
ECTS credits: 3

Course Syllabus

Abstract

This course is an introduction to the modern methods of theoretical and empirical analysis of auctions. We will talk about the four most commonly used auction formats: sealed-bid, open, scoring and double auctions; learn to distinguish them from each other and understand why a given format is chosen in each particular environment. We will learn how to model auctions using games of incomplete information with continuous types, and how to solve these models. A strong emphasis will be put on the mechanism design approach and the application of the envelope theorem. The celebrated revenue ranking result will be discussed. Furthermore, we will learn how models can be used in empirical work, see how these models can be estimated and simulated. At the end of the course students will practice presenting a mock empirical exercise. In the 4th module of 2019/2020 academic year all classes will be switched to online format via ZOOM.
Learning Objectives

Learning Objectives

  • know the basics of mechanism design
  • know the taxonomy of auctions
  • know the basics of theoretical and empirical analysis of auctions
Expected Learning Outcomes

Expected Learning Outcomes

  • be able to set and solve simple auction models
  • be able to estimate and simulate simple auction models
  • be able to make a presentation
Course Contents

Course Contents

  • Course overview and auctions taxonomy
     sealed vs open  multi-unit, multi-dimensional  first vs second price  reserve prices, collusion  auction theory vs empirics: the prime and dual problems
  • Equilibria in private value auctions
     first price auctions  second price auctions  revenue comparison  reserve prices
  • Introduction to mechanism design
     revelation principle  envelope theorem  revenue equivalence
  • Efficiency vs optimality
     IC, IR constraints  efficient mechanisms  optimal mechanisms
  • English auctions, common value
  • Scoring auctions, Double auctions
  • Collusion, Corruption
  • Confronting your model with the data
     Estimation, Simulation  Identification, Heterogeneity
  • Presenting a mock empirical exercise
Assessment Elements

Assessment Elements

  • non-blocking Homeworks
    There will be 5 written homeworks, equally weighted. Fewer problems will be graded than given. The main goal of homeworks is self-practice.
  • non-blocking Midterm exam
  • non-blocking Final exam
    The final grade after the first make-up exam is determined by the same formula as after the main exam: GFinal=0.25GMidterm + 0.25GHW + 0.5 GMake-up1 The final grade after the second make-up exam is determined by a different fomula: GFinal=max( GMake-up2 , 0.25GMidterm + 0.25GHW + 0.5 GMake-up2).
Interim Assessment

Interim Assessment

  • Interim assessment (4 module)
    0.4 * Homeworks + 0.6 * Midterm exam
Bibliography

Bibliography

Recommended Core Bibliography

  • Auction theory, Krishna V., 2010

Recommended Additional Bibliography

  • Che, Y. K. (1991). Design Competition through Multidimensional Auctions. Working Papers. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsrep&AN=edsrep.p.att.wimass.9123
  • John Asker. (2010). A Study of the Internal Organization of a Bidding Cartel. American Economic Review, (3), 724. https://doi.org/10.1257/aer.100.3.724
  • Kyle, A. S. (1989). Informed Speculation with Imperfect Competition. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsbas&AN=edsbas.CF6068AD